Shell logo. Photo: shell.com.
Shell will suspend investments in Kazakhstan while legal claims by the state against major oil companies are being resolved, Chief Executive Wael Sawan said, according to Bloomberg.
“This affects our appetite to continue investing in Kazakhstan,” he said, commenting on arbitration decisions in disputes with the republic. Astana is currently pursuing several legal cases against Western companies, seeking compensation in both national courts and international arbitration. In just one of the cases, potential payouts could reach $4 billion.
Sawan did not specify whether the freeze would affect existing or only new projects. Shell also declined to provide Bloomberg with details. At the same time, the CEO said the company still sees long-term investment potential in the country but will refrain from decisions for now.
At the end of January, it emerged that major oil companies, including Shell and Eni, developing the Karachaganak field in Kazakhstan had lost an international arbitration dispute with the republic. A London court partially satisfied Astana’s claim, which had sought more than $6 billion. The final amount has not yet been determined but could range between $2 billion and $4 billion, according to legal advisers.
The court sided with the government’s position that Karachaganak operators had improperly reimbursed cost overruns and other expenses at the state’s expense that were not agreed upon and should not have been compensated under the production-sharing agreement.
Proceedings with the Karachaganak operators began in 2023. Initial claims totaled $3.5 billion but later increased, including over alleged inflated costs and possible corruption. In 2024, international companies proposed settling the dispute by building a gas processing plant for the domestic market. That option, however, later became the subject of public controversy. Last summer, it was reported that Kazakhstan’s authorities refused to build the plant on the terms proposed by Eni and Shell, which, among other things, sought an additional $1 billion payment on top of full project cost coverage—conditions Astana deemed unacceptable.
